China’s new home sales surge after 19-month slump as property rescue measures boost demand

The sales value accrued by the top 100 home builders rose by an annual 15 per cent in February to 461.6 billion yuan (US$66.5 billion)
The authorities have unleashed a series of rescue measures to buoy the property industry since November

China property

Yulu Ao

Published: 1:30pm, 1 Mar 2023

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New home sales among major Chinese developers increased in February after a 19-month slump as the country emerged from tough Covid-19 restrictions, and supportive measures lured homebuyers back to the market.

The sales value accrued by the top 100 home builders rose by an annual 14.9 per cent in February to 461.6 billion yuan (US$66.5 billion), according to a report released by the China Real Estate Information Corp on Tuesday.

“With the relaxation of Covid-19 restrictions and the recovery of supply, the whole property market is [starting to rebound],” the report said.

It was the first time the property sector had seen year-on-year growth since July in 2021, when many of China’s biggest builders including Evergrande Group and Sunac China Holdings plunged into a liquidity crisis.

The improvement comes after Beijing changed its attitude towards the property sector, the major driver of the country’s growth, and abandoned its Covid-19 measures late last year to revive the country’s economy.

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Authorities have unleashed a series of rescue measures to buoy the property industry since November, including offering credit support to indebted developers for fundraising and easing the criteria facing someone wishing to buy a house.

In one recent example, the China Securities Regulatory Commission announced a pilot program on Monday to allow private equity investors to launch funds and invest in residential and commercial real estate and infrastructure projects. This was seen as a move aimed at boosting liquidity among the builders in China.

Some 30 local governments loosened home purchase restrictions in December and January, including by lowering mortgage rates and cutting down-payments for first-time buyers to boost demand.

“Looking ahead, we expect the market to perform well in March,” said the report written by Yang Kewei and other analysts with CRIC.

March could see a massive surge in housing supply, which would boost new-home transactions, the property research firm said.

“On the other hand, we can see a recovery in the lived-in home market, which is showing an improvement in purchase sentiment among residents,” the report said.

However, the report warned that the uptick in sales in February was partly due to a low base in the previous month and in February last year caused by the Lunar New Year holidays. Home sales are usually very low during this period.

Whether the market can continue its recovery or not will depend on “supply volume and the recovery of demand and purchasing power by residents”, the report concluded.

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